An undercover reporter dubbed the "fake sheikh" has been suspended pending an internal investigation following the collapse of the Tulisa Contostavlos drugs trial.

The former N-Dubz singer, 26, was accused of brokering a cocaine deal for Mazher Mahmood, but the trial was thrown out after the judge told the jury there were "strong grounds" to believe Mr Mahmood had lied.

Reading a statement outside Southwark Crown Court, Ms Contostavlos said the whole case had been a "horrific and disgusting entrapment" by Mr Mahmood and The Sun on Sunday newspaper.

"Mahmood has now been exposed by my lawyers openly lying to the judge and jury. These lies were told to stop crucial evidence going before the jury, " she said.

Mr Smith originally suggested he had heard the star talking disapprovingly about drugs, but "changed his mind" after a conversation with the undercover reporter, the court was told.

During a pre-trial hearing, Mr Mahmood was asked: "Did you subsequently ask or find out, discuss with Mr Smith anything that was said in the car?"

He replied: "No."

Michael Coombs, also known as Mike GLC, walks free

Asked if at any stage he discussed Ms Contostavlos saying she "disapproved" of drugs, he also said no.

But the judge said he gave answers which were "entirely inconsistent" when he gave evidence about the same topic at the trial last week.

It can now be reported that, before the trial began, defence counsel argued that the case should be "stayed" - meaning thrown out - but their application was turned down.

In her statement Ms Contostavlos denied ever having dealt or taken cocaine and said she was targeted by the reporter when things were going badly for her.

Ms Contostavlos has urged the police to launch an investigation and said "this type of entrapment should not be allowed to happen to anyone", adding that her life had been ruined for a year.

A Sun spokesman said: "We are very disappointed with this outcome, but do believe the original investigation was conducted within the bounds of the law and the industry's Code. This was demonstrated by the CPS decision to prosecute.

"The Sun, of course, takes the judge's remarks very seriously. Mr Mahmood has been suspended pending an immediate internal investigation."

Explaining his decision to halt the case to the jury, the Judge Alistair McCreath said: "Occasionally - very rarely - circumstances may arise in which a court has to say that, whatever apparent merits a prosecution may have, the court cannot allow the prosecution case to be taken forward to trial."

He said the situation arose from a "fundamental principle" that the court "cannot allow itself to be party to improper conduct".

The Metropolitan Police said it was aware of the judge's decision and would "continue to liaise with the CPS should further work be required".

Earlier, Ms Contostavlos appeared ecstatic, punching the air as she left the dock before crying as she hugged supporters including her PA, Gareth Varey, shortly after the case against her was thrown out.

Mike GLC - whose real name is Michael Coombs - pleaded guilty before the start of the trial to supplying half an ounce (13.9g) of cocaine, but he also walked free after the judge said the case could not proceed against him.

The 36-year-old also wept as he hugged defence barrister Jeremy Dein QC.